OAK BROOK, IL—The McDonald's Corporation announced Tuesday that it will close 175 restaurants and cut nearly 600 corporate jobs, responding to a plunge in stock prices blamed on a depressed economy and rising consumer interest in actual food.
"Though still America's number-one hamburger retailer," McDonald's CEO Jim Cantalupo said, "we have entered a brief period of restructuring due to the steady growth of other convenience eateries and, more significantly, growing competition from producers and distributors of demonstrably nutritive matter, i.e. food."
In the fourth quarter of 2002, McDonald's posted the first quarterly loss in its 47-year history. Its stock closed Tuesday at $15.78, a seven-year low for the quasi-food giant.
Analysts attribute the bleak financial picture to numerous factors, including the uncertain economy, poor management, eroding market share, and widespread health concerns about beef—a component sometimes used in the construction of McDonald's hamburger patties.
"Though well-accustomed to weathering recessions and changing tastes, the Golden Arches may be facing its toughest battle ever, given the surging public interest in leading healthy, active lives and consuming objects that taste at least remotely organic," analyst Carolyn Moss of Lehman Brothers said. "These days, people seem more interested in eating food than hormone-hybrid lab patties."
The world's leading purveyor of semi-synthetic digestibles, McDonald's became a franchise in 1955 and quickly expanded across the U.S., thanks to innovative marketing, low prices, and exemption from FDA regulations, given that its products fall outside the scope of the agency. McDonald's has proven a popular favorite among busy, on-the-go Americans lacking the time for genuine food.
But for all its financial woes, McDonald's is optimistic for the future.
"This whole non-reconstituted-food craze will pass," Cantalupo said. "People have enjoyed our meat-flavored pseudo-patties for decades, and we're not going to be scared by consumers' passing interest in burgers that actually taste like an animal, served on bread that's less than a week old and garnished with ve-ge... ve-ge... ve-ge-tables."
Said McDonald's COO Charlie Bell: "We don't see the burgeoning food industry as a threat, but rather as a public fancy with which McDonald's can happily co-exist."
Added Bell: "I even enjoy some food myself here and there. I ate some corn just last weekend."
In spite of McDonald's outward optimism, rumors abound that the company is pondering some of its most extreme changes ever. McDonald's famed management-training facility, Oak Brook's Hamburger University, is reportedly developing an unprecedented "food studies" program. The facility is also rumored to be adding a research wing to teach culinary fundamentals for eventual incorporation into the McDonald's business plan.
"The bottom line is, we're doing fine," Bell said. "Certainly, as a last resort, we could introduce some recognizably food-like items, perhaps a sandwich made with animal matter and vegetables that have not been shredded, condensed, and flash-frozen to remove all possible nutritional content or general appearance of earthly origin. But I honestly don't think it will ever come to that."